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CU System

CU July Membership Growth 3X Population Growth

MADISON, Wis. (9/4/13)--Credit union membership growth is moving three times faster than U.S. population growth, according to the Credit Union National Association's monthly sample of credit unions for July. That report also reflects a continuation of strong, overall first-half-of-the-year results.

Total memberships expanded rapidly in July--increasing by 0.4% in the month and pushing them over the 98 million mark, Mike Schenk, CUNA vice president of economics and statistics, told News Now.

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"The recent rate of membership growth is unlikely to be sustained throughout the year but the data does show credit union memberships are up by 2.7% compared to year-ago levels--that's about three times faster than the U.S. population growth rate, which has been expanding at an annual rate of slightly less than 1% recently. That's a clear indication that more consumers continue to recognize the credit union difference and understand that credit unions are the best choice for consumer financial services," Schenk concluded.

Schenk also noted: "Overall credit union loans grew by a strong 1% in the month and by 5.5% over the past year. Strong increases were seen in almost every major loan category we track, with unsecured personal loans leading the way, reflecting a 2.1% increase in July and 8.8% year-over-year."

Automobile loan growth also was very strong: New autos expanded by 1.8% in the month (11.9% year-over-year) and used autos grew by 1.6% in July (9.7% year over year), Schenk said. Fixed-rate first mortgages (1.3% in July and 9.4% year over year), and credit cards (1.2% in July and 6.7% year over year) showed solid gains and even adjustable rate first mortgages "showed signs of life" (1% in July and 1.5% year over year), he added.

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Savings balances declined somewhat, which given the fast growth in loans, led to an increase in the movement's aggregate loan-to-savings ratio--which gained one full percentage point--to 68.5% at the end of July from 67.5% in June, Schenk said.

"The combination of a continued labor market improvement, significant pent-up demand, and seasonally strong borrowing should result in additional relatively strong loan growth in the coming months," Schenk explained. "All else equal, this should have a positive influence on credit union bottom-line results as short-term, liquid investments yielding close to zero are replaced with higher-yielding assets."

Asset quality improved marginally in the month as dollar delinquencies ended at 0.97%, compared with a reading of 0.99% at the end of June. The movement's aggregate delinquency rate has declined in six of the past seven months, said Schenk.

"CUNA economists continue to stress the likelihood of slow improvement in economic conditions, with a continuation of slow-but-sure labor market improvement, marginal income gains and more loan growth," Schenk said. "This suggests that the improving asset quality trends we've seen will continue in the coming months. More importantly, the improvements are likely to push the aggregate delinquency rate back down near the 1% long-run norm in 2013."